Inventory management comes with the territory of running a business. You need to have the right products, in the right quantity, and at the right time. If you can do this effectively then you will be able to reduce the cost of carrying excess inventory while also streamlining your sales. Good inventory management can help you to track things in real-time, not to mention that it also helps you to simplify your process. If you can take the time to manage your inventory well then this will translate into you making more business sales, which can benefit you in the long run. So how do you avoid the trap that comes with having too much or too little inventory? By using software, and by taking steps to make sure that you are always aware of what you have and why.
Fine-Tine Forecasting
One of the first things you need to do is fine-tune your forecasting. You can only do this with the right data. Projected sales figures should be based on a range of data, including your historical sales, current market trends, predicted growth and even any marketing efforts you are making right now. Don’t make the crucial mistake of assuming that all of your insights are going to come from business intelligence. Warehouse, customer service teams and even marketing professionals can all be an invaluable source of data when it comes to your forecasting. Data silos are the enemy when it comes to inventory management so make sure that you invest in this and that you make sure that you have access to what you need, when you need it. If you don’t take steps like this then you may end up struggling more in the long run which is the last thing you need.
FIFO Approach
First-in, first-out is a good approach that you can adopt. It involves you selling your goods in chronological order from the date that they were purchased or made. While this really is a no-brainer when it comes to perishable goods, such as food, it is good for non-perishable items. If you can adopt the FIFO approach then this will help you to understand what you have at any given time. If you can, make sure that you are adding new items from the back of the warehouse, and that you push the others to the front. If you can do this then you will be able to reduce the cost of selling your goods in general, not to mention that you can also greatly increase your net income which is great, to say the least.
Do a Stock Audit
You won’t be able to manage your stock efficiently if you don’t do a stock audit. Inventory management software is great here, but it doesn’t give you a granular overview of what you have. As capable as it might be, it does have its blind spots. You cannot account for missing inventory because you have had a few shoplifters or because you have experienced accidental damage. The same applies to breakages too. If you want to do something about this then make sure that you do a stock audit right now so you can track everything properly and so you can make sure everything is as it should be. Companies use different techniques, such as annual inventory audits so that every single item can be documented.
Cloud-Based Software
When the time comes for you to start using inventory management software, you need to make sure that you are using a solution that is entirely cloud-based. This is especially the case when you are managing your inventory across multiple locations. This provides inventory visibility across sites, and they are all updated in real time. Of course, a lot of software providers focus on including automated functions as well as ways to try and reduce some of the more unnecessary labor costs. They also tend to have a host of analytics which helps to aid in forecasting as well as helping with robust security. This helps to reduce the risk of downtime and it also helps to eliminate blind spots. At the end of the day, automotive dealerships need specialist software to feed stock to advertisers, so it’s always a good idea to invest in software where you can, as it could make a major difference to your business.
Track your Stock Levels
Another way that you can help manage your inventory would be for you to track your stock levels at all times. You need to keep a constant eye on things. One way for you to do this would be for you to integrate it with your POS software. You can update stock automatically this way. Data tends to be stored centrally a lot of the time, and if this is the case with you then it is wise for you to check the availability across different sites. If a customer wants an item that is out of stock at one location then you can source it from another. You can’t do this if you do not track your stock levels however, so don’t just take note of what stock you have, make an effort to find out where it is and how much of it you have. By doing this, you can help to eliminate a lot of guess work when it comes to inventory and you can also reduce the risk of stockouts for your more popular items. This helps you to stop excess stock from your items and it also prevents it from impinging on your cash flow.
Practice the 80/20 Rule
This rule states that 80% of your income needs to come from 20% of your clients. If you apply this to inventory, then 80% of your profit needs to come from 20% of your inventory. As a business leader, you need to focus on the 20% where possible. If you can apply this principle then you need to try and prevent a disconnect between your customer demand and your inventory supply.
It’s All About ABCs
Another principle that tends to pair very well is doing your ABCs. This involves categorizing your inventory. The great thing about doing this is that it helps to establish inventory. A items are the top 20% of your products that drive the most profit. You then have B items. These items are the middle 30% that drive an average amount of profit. C items are your bottom 50% which probably drives around 10% of your sales. If you can take the time to establish a hierarchy like this then it becomes clear that anything that is listed as being an A item has to be prioritized. This is the best way for you to make sure that they are available and that you command the most profit with them. If you can keep this in mind, you will soon find that it is easier than ever for you to get the result you are looking for in terms of your business inventory. While B items are important, you should move them if they are taking up the place of an A item. If you have C items that are limiting your space for A and B items then again, you should move these. If you can do that then you will soon find that it is easier for you to manage everything and that you can optimize your revenue as a result.
If you need some help with your inventory then inventory management software is certainly the way to go. Why not see if you can find an option that works for you today?
